Ireland - Economic forecast summary (November 2016)

Economic growth is projected to moderate gradually. The economy, particularly exports and investment, is already being slowed by the prospect of Brexit. Nonetheless, the Irish economy will continue to expand on the back of solid domestic demand and strong employment and wage growth.

The fiscal stance is expected to be broadly neutral, exerting a smaller drag on activity than in past years. The government is nevertheless on track to attain its medium-term goal of balancing the budget. Financial conditions will remain supportive overall. Structural reforms should prioritise making economic growth more inclusive by getting more people back into work and revamping the tax and benefit system.

Public investment remains low and direct taxes rose following the crisis. Ireland has gained fiscal space through strong growth and low interest costs, providing room to roll back some of the measures taken after the crisis. The welcome six-year plan on infrastructure investment for 2016-21 will raise public investment back towards its pre-crisis level. The universal social charge, an income levy introduced after the crisis, should be reduced as planned.